Customer Value Add-On

Posted in Marketing and Strategy Terms, Total Reads: 403

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Definition: Customer Value Add-On

Customer Value is an abstraction for a customer’s total assessment of a business based on perceptions of benefits received and sacrifices made. Customer Value Add-on is a subset of the benefits received by a customer of a business.

Core Benefits are the core requirements such as product quality, delivery time or quantity that the business must definitely provide to be even included in the customer’s consideration set.

Addon Benefits are like points of differentiation. They are attributes that differentiate in the customer’s mind the various businesses. These are services and less often products that are provided by one company and not by the other and thus, allows greater value to be added to the relationship between the company and customer. Examples of add-on benefits may be 24/7 Customer Service, Loyalty Points, free delivery, free installation etc..

Research by Menon, Homburg and Beutin has found that addon benefits tend to carry more weight with customers than core benefits and tend to be the differentiator when a customer has to make a choice between competing offerings.

There are various methods to measure the effects of add-on benefits are strategize to offer them. One of the most common methods is Customer Relationship Management, in which customers are divided according to their current value and again according to the potential for increasing long-term value and different schemes, plans, representatives etc. are assigned to the categories.